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Greenberg: Should Probe at 200%-Lender, World Acceptance, Be a Surprise?

SAN DIEGO (TheStreet) -- The body slam of World Acceptance's(WRLD - Get Report) shares, after it disclosed that it is being investigated by the Consumer Financial Protection Bureau, shows how some stocks are elevated from here to kingdom come on air and (at the first sign of trouble) weak-kneed investors.

World, which I originally red flagged in 2012, has been an expert at keeping itself inflated on buybacks. That points to an inherent flaw in buybacks: The prospect that shares will fall below the buyback price. That's especially true at companies like World, which are walking a thin line in a world of controversy and use buybacks to keep their shares from falling.

In this case, World charges upward of 200% in annual interest on installment loans to poor people. The company, in the face of mushrooming concerns in the press and elsewhere, has responded by levering up -- by taking on more debt to buy back an ever increasing number of shares.

Over the past year, it paid on average $85.13 a share, or $186 million, to buy 2.2 million shares. That's well above where the stock now trades. At the same time, if my calculations are correct, management sold $6.4 million worth of stock.

Reality: This is one of those names you just knew would one day get a registered letter in the mail. Who knew it would take this long? But now, in retrospect, the timing of the departure late last year of the company's CFO and president, almost in lockstep, makes you wonder who knew what when?

Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security. He can be reached at herbonthestreet@thestreet.com.